The Justice Department pulled the rug out on August 5. It revoked a 1987 Business Review Letter that had given Institutional Shareholder Services (ISS) a free pass under antitrust law for nearly four decades. The move signals the end of a long regulatory truce and threatens the $3 billion proxy advisory industry that operates almost entirely outside public view.

ISS and Glass Lewis control over 90% of the market advising institutional investors, pension funds, and asset managers on how to vote on shareholder proposals. They weigh in on executive pay, board elections, mergers, and ESG resolutions at virtually every major US public company. Their recommendations carry enormous weight. Many fund managers simply follow their lead.

The dual-client problem that sparked the crackdown

Here's where it gets messy. ISS doesn't just advise shareholders on how to vote. It also sells governance consulting services to the same corporations whose shareholders it advises. That conflict of interest sat dormant for decades under the 1987 letter. The DOJ concluded the letter no longer reflects how ISS actually operates. The company has evolved far beyond what regulators blessed back then.

The timing wasn't accidental. President Trump signed an executive order in December 2025 directing federal agencies to review antitrust concerns around proxy advisers. He specifically named ISS and Glass Lewis as targets. Congressional hearings throughout 2025 piled on the pressure, with lawmakers questioning whether two firms should have this much influence over corporate governance. The Department of Labor added teeth in April 2026, issuing guidance that could classify proxy advisers as ERISA fiduciaries, which would impose much stricter legal standards and liability.

ISS faces a choice now. It can restructure to separate its shareholder advisory business from its corporate consulting work, or it can brace for a formal antitrust investigation. Either way, the quiet reign over corporate voting is over.

This article is for informational purposes only and should not be construed as legal or investment advice.